Brazilian domestic rebar market monitors demand levels for key sector drivers

This is the second in a two-part series examining the price and demand landscape in Brazil's domestic rebar market. Read part one here.

The Brazilian domestic rebar market faced a steady increase in the volume of imports from Egypt, but combined with weaknesses in local demand, it seemingly pointed to a perfect storm.

In the view of a Brazilian market agent, the current obstacles in Brazil's rebar segment are less related to imports and more to domestic demand, which in recent years has plunged into a challenging macroeconomic situation. Furthermore, the entry of more producers and, consequently, "increasing volume in a market that has not experienced growth at the same pace as the expansion plans of local steelmakers over the past few years does not seem logical."

According to the Brazilian Chamber of the Construction Industry, or CBIC, in the first quarter of 2025, construction GDP grew 3.4% compared with the same period in 2024, supported by strong real estate activity. New construction projects grew 15% and sales increased almost 16%. The Minha Casa, Minha Vida popular housing program accounted for more than half of these launches.

The sector has reached over 3 million formal workers, returning to record levels seen in 2014. And for the second half of the year, the outlook remains positive, based on the CBIC, which projects construction GDP growth of approximately 2.3% in 2025. Furthermore, the chamber's survey of construction industry leaders signals optimism for new projects, hiring, and input purchases, although they are cautiously observing the scenario, as high interest rates, inflation, and costs could still affect the pace. Still, the construction sector is expected to demand steel to the same extent.

For a buyer, the demand for steel from the construction sector, particularly from high-end projects and the popular Minha Casa Minha Vida program, is expected to remain strong in the second half of 2025 and the first phase of 2026. However, contracts for the middle class may suffer due to high interest rates, a situation that is already occurring with the withdrawal of purchase contracts at the time of property financing. As a result, the demand that is expected to be stable may not have sufficient volume to keep steelmakers in a state of complete tranquility; there may still be intense competition for market share, according to him.

Regarding the increase in consumption and entry of Egyptian rebar into Brazil and the exclusion of the product from the Brazilian government's renewed list in the quotas and 25% import tariff system, the Brazilian Steel Institute declined to comment.

A source in the trade defense area said that Brazilian steelmakers need to understand that general antidumping strategies will take time and that the government is not willing to enter into discussions for materials that are part of agreements already signed, he said, referring to the presence of rebar in the Mercosur agreement list.

"This has not happened only in steel, but in other markets, the number of defense requests for government analysis has practically doubled," he added.

A Brazilian distributor said that Egyptian rebar has been consumed more in the South region of Brazil, but that it would only be a matter of time before it would be more widely absorbed in the Southeast.

"Just as happened with Turkish rebar, which was being sold at retail, we could have the same scenario with Egyptian material," he said.

Another buyer said that the quality of Egyptian material is equivalent to that produced in the Brazilian market, while a construction company said it had not yet closely evaluated the advantages of the imported steel, although it already focuses on diversifying steel suppliers.